PUBLIC sector banks have seen their profits zoom in fiscal 2002. Net profits of 186 banks (out of 27) that have announced their results have gone up by 100 per cent to Rs 4,412 crore.

Particularly noteworthy is the sharp growth in profits for all the `weak banks' - Indian Bank, United Bank of India and UCO Bank. Indian Bank turned in a profit of Rs 33 crore compared to a loss of Rs 274 crore in the previous year while United Bank of India which saw its profits grow more than six-fold to Rs 129 crore.

And UCO Bank saw its profits rise five-fold to Rs 165 crore. Other banks such as Bank of India, Indian Overseas Bank, State Bank of Indore, Canara Bank and Union Bank doubled their profits in the year.

Spectacular as these results are, it must be pointed out that they came mainly or in most cases almost entirely from treasury operations. Massive profits were made in selling off investments, particularly in government securities. Yields in government securities were down by 3 percentage points during the course of the year. That saw prices shoot up and quite a few banks capitalised on the opportunity.

It will be interesting to see what impact other income will have on Dena Bank's results. Dena Bank, it may be recalled was the only bank apart from Indian Bank to post a net loss (of Rs 266 crore) in 2000-01.

As for the others, the profits made in fiscal 2002 are more in the nature of a windfall. Market sentiment has turned choppy once again, as war clouds gather. Yields have already been climbing over the last month (by nearly one percentage point) and could go up further in the backdrop of war preparations and possible increase in government borrowings.

Treasury is unlikely to be "the profit centre" this year. Investors must keep this in mind, since a couple of equity offerings from some of these banks are just around the corner.